Seven Months of Contrary Opinions

For seven months now, we’ve featured a Contrary Opinion button in your weekend edition of Cabot Wealth Advisory. So I thought it’d be time to remind you why we have these buttons appearing each week. Here’s Cabot Publisher Tim Lutts to describe the buttons:

“The intention of my buttons is to make you think … particularly about the role of the average investor in the stock market. Ideally, increased understanding of the thoughts expressed on these buttons–particularly the wisdom that comes from thinking differently–will help you become a better investor … though it will take time.

“Where did the buttons come from? It all started in 1963.

“That was the year Humphrey B. Neill hosted the first Contrary Opinion Forum in Manchester, Vermont. Humphrey, who styled himself ‘The Vermont Ruminator’ had written a number of books on investing, including Tape Reading and Market Tactics (1931), Understanding American Business (1939), The Inside Story of the New York Stock Exchange (1950), The Art of Contrary Thinking (1954) and The Ruminator (1975). The Contrary Opinion Forum was a gathering at which he spoke and shared ideas–typically on the subject of investing–with open-minded and contrary-minded people.

“The Forums became an annual event, and soon Jim Fraser joined Humphrey as co-host. Jim ran a money management business in Burlington, Vermont, relying in part on contrary opinion to guide him into stocks of value and away from areas too heavily influenced by the crowd. But Jim was more than a money manager; he was also a dealer in old books (primarily books on investing) and he eventually came to republish many of them as Fraser Publishing Company.

“While I never knew Humphrey Neill (he passed away in 1977, and I attended my first Forum in 1986), I knew Jim Fraser well. A kind and wise independent thinker who found his own quiet road to success, he was notable for donning an old silk top hat at the Forum and honking a battered brass automobile horn to attract the crowd’s attention and start the event rolling.

“Somewhere along the way (quite early), Jim began the tradition of printing the buttons (soon producing two a year) and distributing them to the attendees, and I’ve kept all mine. Like Jim, I have a soft spot for the wisdom of the ages and a well-turned phrase.

“Jim bowed out of the business after the turn of the millennium, and the book publishing business faded with him, but Fraser Management lives on under the guidance of Alex Seagle and Len Davenport and the Contrary Opinion Forum is still going strong. Equally important–at least in my opinion–Alex Seagle has maintained the tradition of producing and distributing the buttons.

“For many years, I’ve had my buttons arrayed on the wall of my cubicle, where I can draw inspiration and wisdom from them.

“Interestingly, while doing the research for these interpretations, I learned that many of the sayings were quotations (often miss-quotations) from famous people, and this has added a new layer of meaning to many of them.

“I hope you enjoy the buttons and feel a little wiser after reading them.”

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And now for your button this week. Remember, you can always view all of the buttons by clicking here.
If It Is To Be It Is Up To Me

Attributed to William H. Johnsen, this quote is composed entirely of two-letter words. It says take responsibility, take charge, and stop waiting for someone else to do the job. When it comes to investing, Cabot’s business is to make recommendations, but the fact is it’s going to be you who actually makes the decision to buy and sell a stock. And it has to be you who realizes your own strengths and weaknesses as an investor, and makes the decisions that are right for you.

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Voice recognition software has become a huge segment of the technology market in recent years, and given the Consumer Electronics Show in Las Vegas last week that’s only going to increase. One of the biggest beneficiaries of this new focus on speech recognition is Nuance Communications (NUAN), the company who created the Dragon Naturally Speaking typing software and whose technology is widely believed to power Siri, the voice assistant on Apple’s iPhone 4S.

Nuance is a rarity in the technology space; a high-tech company with an easy-to-understand story behind it. They’re the current leader in the speech recognition market, and because of this position they’ve come into the news many times over the last several weeks.

At CES, Nuance announced a deal with Intel to jointly produce a voice-enabled ultrabook laptop, its Dragon Go! voice app is now available in the Android market, and there are rumors of upcoming versions of Apple’s iPad and iPod Touch including Siri technology.

Nuance wasn’t a leader in the last bull market between March 2009 and April 2011, but it began rallying on an impressive scale in September 2011 after a quick drop in August. Before that rally was over, the stock had risen five weeks in a row on huge turnover, and last week the stock broke out on big volume.

You can read more about NUAN in the recent issue of Cabot Top Ten Trader, where Editor Mike Cintolo details more about why he likes the stock. Click here to learn more.

In case you didn’t get a chance to read all the issues of Cabot Wealth Advisory this week and want to catch up on any investing and stock tips you might have missed, there are links below to each issue.

On Monday, Cabot Publisher and Cabot Stock of the Month Editor Tim Lutts talked about the retirement of long-time employee Pat Carr and a special Cabot Benjamin Graham Value Letter report on six undervalued Canadian companies that are poised for breakouts.

On Thursday, Cabot Market Letter Editor Mike Cintolo cautioned investors to not let their emotions rule them and instead act with a focused strategy. Mike also wrote about a study we did on what happens in the first and second years following a down market.

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Market Update

From Cabot Top Ten Trader

To say it’s been a topsy-turvy week has been an understatement. The rotation that we started to pick up on a couple of weeks ago was unleashed late last Friday and the first couple of days of this week, with just about any stock and sector that’s enjoyed a good run this year coming under pressure—including more than a few names that flashed abnormal intermediate-term action. Right now is basically the definition of an environment where you should take things on a stock-by-stock basis. If your loss limits are tripped, sell. If a decent winner you had is back to breakeven, put in a tight stop. And if you have a good-sized winner that’s tripped its stop, sell at least some of your shares, if not all.